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Report to the Ranking Member, Subcommittee on Oceans, Atmosphere,
Fisheries, and Coast Guard, Committee on Commerce, Science, and
Transportation, U.S. Senate:
United States Government Accountability Office:
GAO:
February 2009:
Seafood Fraud:
FDA Program Changes and Better Collaboration among Key Federal Agencies
Could Improve Detection and Prevention:
Seafood Fraud:
GAO-09-258:
GAO Highlights:
Highlights of GAO-09-258, a report to the Ranking Member, Subcommittee
on Oceans, Atmosphere, Fisheries, and Coast Guard, Committee on
Commerce, Science, and Transportation, U.S. Senate.
Why GAO Did This Study:
In 2007, Americans consumed almost 5 billion pounds of seafood. Most
seafood buyers, at many levels—importers, distributors, supermarkets,
restaurants, and individual consumers—assume that the seafood they buy
is what the seller claims it is. However, this is not always the case.
Sometimes seafood products are mislabeled for financial gain—an
activity called seafood fraud. Three federal agencies play key roles in
detecting and preventing seafood fraud: the Department of Homeland
Security’s Customs and Border Protection (CBP), the Department of
Commerce’s National Marine Fisheries Service (NMFS), and the Department
of Health and Human Services’ Food and Drug Administration (FDA). GAO
was asked to determine (1) the actions key federal agencies take to
help detect and prevent seafood fraud and (2) the extent to which these
key federal agencies collaborate with each other to help detect and
prevent seafood fraud. GAO reviewed data and documents from each agency
on actions to detect and prevent seafood fraud, and interviewed agency
officials and other key stakeholders.
What GAO Found:
CBP and NMFS conduct several activities to help detect and prevent
seafood fraud, but FDA told GAO that it focuses on food safety and
undertakes few fraud-related activities. Nonetheless, fraud can result
in food safety problems. For example, fish that was mislabeled as a
different species for financial gain has caused illnesses due to the
presence of a potentially deadly toxin.
* CBP reviews seafood import documentation to detect schemes to avoid
paying the appropriate customs duties as seafood products enter the
country, among other things.
* NMFS addresses seafood fraud through its voluntary, fee-for-service
inspection program, which includes inspecting seafood that retailers,
among others, are purchasing to verify its net weight and ensure the
species is correctly identified. According to NMFS officials, NMFS
inspects approximately one-third of the seafood consumed in the United
States.
* FDA examines only about 2 percent of imported seafood annually, and
its primary seafood oversight program does not address economic fraud
risks, which limits its ability to detect fraud. An FDA seafood fraud-
related activity is the maintenance of a publicly available list of
seafood names that is intended to help the industry correctly label
products. However, until 2009, FDA had not fully updated the list it
created in 1993 to reflect over 400 name changes. Finally, FDA’s
guidance to help seafood processors comply with its seafood oversight
program does not reflect the seafood labeling requirement of the Food
Allergen Labeling and Consumer Protection Act of 2004 to include the
species of fish or shellfish on product labels. Because of the limited
scope of FDA’s seafood oversight program, its mismanagement of the
Seafood List, and its failure to update its guidance to reflect the
allergen labeling requirement, consumers have less assurance that the
seafood they purchase is correctly labeled.
The federal agencies that share responsibility for detecting and
preventing seafood fraud—CBP, NMFS, and FDA—do not effectively
collaborate with each other. Specifically, they have not identified a
common goal, established joint strategies, or agreed on roles and
responsibilities. As a result, the agencies have not taken advantage of
opportunities to share information that could benefit each agency’s
efforts to detect and prevent seafood fraud, nor have they identified
similar and sometimes overlapping activities that could be better
coordinated to use limited resources more efficiently. For example,
each agency has its own laboratory capability for determining seafood
species and uses different methodologies for creating standards for
species identification. The result is that neither the laboratories nor
the data developed in them are shared.
What GAO Recommends:
GAO is making recommendations to CBP, NMFS, and FDA that are intended
to help reduce the prevalence of seafood fraud, increase interagency
collaboration, improve information sharing, and reduce overlaps. In
commenting on a draft of this report, CBP, NMFS, and FDA generally
agreed with the recommendations.
To view the full product, including the scope and methodology, click on
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-09-258]. For more
information, contact Lisa Shames at (202) 512-3841 or shamesl@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
CBP and NMFS Take a Variety of Actions to Detect and Prevent Seafood
Fraud, While FDA Takes Few Actions Related to Seafood Fraud:
Limited Collaboration Exists among the Key Agencies Responsible for
Detecting and Preventing Seafood Fraud:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Comments from the Department of Commerce:
Appendix III: Comments from the Department of Health and Human
Services:
Appendix IV: Comments from the Department of Homeland Security:
Appendix V: GAO Contact and Staff Acknowledgments:
Table:
Table 1: Types of Seafood Fraud That Federal Agencies Might Detect:
Abbreviations:
CBP: Customs and Border Protection:
FDA: Food and Drug Administration:
HACCP: Hazard Analysis and Critical Control Point:
HHS: Department of Health and Human Services:
ICE: Immigration and Customs Enforcement:
MOU: memorandum of understanding:
NFI: National Fisheries Institute:
NMFS: National Marine Fisheries Service:
NOAA: National Oceanic and Atmospheric Administration:
NTAG: National Targeting and Analysis Group:
USDA: U.S. Department of Agriculture:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
February 19, 2009:
The Honorable Olympia J. Snowe:
Ranking Member:
Subcommittee on Oceans, Atmosphere, Fisheries, and Coast Guard
Committee on Commerce, Science, and Transportation:
United States Senate:
Dear Senator Snowe:
In 2007, Americans consumed almost 5 billion pounds of seafood. Most
seafood buyers, at many levels--importers, distributors, supermarkets,
restaurants, and individual consumers--assume that the seafood they buy
is what the seller claims it is. However, this is not always the case.
Sometimes people mislabel seafood products for financial gain--an
activity called seafood fraud. The most common types of seafood fraud
are shipping products through an intermediary country to avoid customs
duties (transshipping), adding excessive amounts of water or ice to the
seafood to increase its weight (over-treating), substituting a
different species of seafood for the species listed on the label
(species substitution), including less seafood in a package than
indicated by the label (short-weighting), and other types of
mislabeling or misrepresenting of seafood products.
Although comprehensive information on the extent of seafood fraud does
not exist, seafood industry officials believe that seafood fraud is a
problem. The available information suggests that the scope and economic
impact of seafood fraud vary widely and can occur at any point in the
seafood supply chain, from large-scale, multinational schemes involving
importers--with impacts in the millions of dollars--to fraudulent
activities at individual restaurants or grocery stores. Seafood fraud
can have both food safety and economic consequences. For example,
seafood fraud affected food safety in 2007 when imported puffer fish,
which contains a potentially deadly toxin, was mislabeled as monkfish,
and people became ill. Another example of fraud is including the ice-
glaze covering used to freeze and preserve fish fillets in the net
weight of the product, which has primarily an economic impact because
consumers get less fish than they paid for. Seafood fraud can undermine
consumer confidence in the U.S. seafood supply, over 80 percent of
which is imported.
Three federal agencies play key roles in detecting and preventing
seafood fraud: the Department of Homeland Security's Customs and Border
Protection (CBP), the Department of Commerce's National Marine
Fisheries Service (NMFS), and the Department of Health and Human
Services' Food and Drug Administration (FDA). CBP collects customs
duties on imports, including seafood, and seeks to prevent the evasion
of customs duties. Goods imported into the United States may be subject
to duties on the basis of their product type, value, and country of
origin, among other things. In addition, to limit the sale of foreign-
made products in this country at less-than-normal value, called
"dumping," some imported goods are also subject to antidumping duties.
NMFS provides fee-for-service inspection services on request to the
seafood industry, including processors, distributors, and other firms.
These inspections can address economic integrity issues, such as the
accuracy of a seafood product's label, as well as seafood safety
issues. Finally, FDA is responsible for ensuring that the nation's food
supply, including seafood, is safe, wholesome, and properly labeled. To
that end, FDA is authorized to issue regulations to enforce the Federal
Food, Drug, and Cosmetic Act. The act prohibits the misbranding or
adulteration of food products, which would include the mislabeling and
substituting of seafood products that constitute seafood fraud. FDA is
responsible for seafood that is imported into the United States as well
as seafood that is harvested and processed domestically. FDA inspects
U.S. importers and domestic and foreign processors to ensure their
compliance with applicable requirements, including labeling
requirements and FDA's Seafood Hazard Analysis and Critical Control
Point (HACCP) regulations. The HACCP regulations require seafood
processors to identify and develop processes to mitigate biological,
chemical, and physical hazards that are likely to occur. FDA also
provides guidance to the seafood industry on the naming of seafood
products and on food safety hazards. Table 1 shows the types of seafood
fraud that these three agencies might detect when performing their
authorized roles.
Table 1: Types of Seafood Fraud That Federal Agencies Might Detect:
Fraud type: Transshipment to avoid duties;
CBP: [Check];
NMFS: [Empty];
FDA: [Empty].
Fraud type: Over-treating;
CBP: [Empty];
NMFS: [Check];
FDA: [Check].
Fraud type: Species substitution;
CBP: [Check];
NMFS: [Check];
FDA: [Check].
Fraud type: Short-weighting;
CBP: [Empty];
NMFS: [Check];
FDA: [Check].
Fraud type: Other mislabeling or misrepresenting;
CBP: [Check];
NMFS: [Check];
FDA: [Check].
Source: GAO analysis of documents obtained from and discussions with
CBP, NMFS, and FDA.
[End of table]
When an issue crosses federal agency lines, as seafood fraud does, the
agencies involved must collaborate to deliver results more efficiently
and effectively. For the purpose of this report, we define
"collaboration" as a joint effort by two or more agencies that is
intended to produce a greater public benefit than when the agencies act
alone. Our previous work indicated that federal agencies can
efficiently and effectively collaborate when they, among other things,
(1) identify a common goal, (2) establish joint strategies to achieve
that goal, (3) agree on their roles and responsibilities, (4) identify
ways to maximize and leverage their resources, and (5) establish
procedures and policies for working together systematically across
agency lines.[Footnote 1] When agencies do not collaborate efficiently
and effectively, their individual efforts are carried out in an
uncoordinated way, thereby limiting the overall effectiveness and
efficiency of federal expenditures. For example, in 2007, we added the
federal oversight of food safety to our high-risk list because this
fragmented system--in which 15 federal agencies collectively administer
at least 30 laws related to food safety--has caused inconsistent
oversight, ineffective coordination, and inefficient use of resources.
[Footnote 2]
In this context, you asked us to determine (1) the actions key federal
agencies take to help detect and prevent seafood fraud and (2) the
extent to which these key federal agencies collaborate with each other
to help detect and prevent seafood fraud.
Our research identified CBP, NMFS, and FDA as the key agencies involved
in detecting and preventing seafood fraud. To determine the actions
these agencies have taken to detect and prevent seafood fraud, we
reviewed data and documents from each agency on the amount and nature
of seafood fraud that they have identified, actions they have taken to
prevent seafood fraud, and actions they have taken against fraud
perpetrators. At all three agencies, we reviewed program guidance,
inspection operation manuals, and other documentation and interviewed
knowledgeable officials. We also obtained examples of seafood fraud
criminal investigation cases and met with representatives from the
major seafood industry trade associations. To determine the extent to
which key federal agencies collaborate with each other to help detect
and prevent seafood fraud, we reviewed existing federal interagency
agreements and spoke with agency officials from CBP, NMFS, and FDA.
(Appendix I provides additional information on our scope and
methodology.)
We conducted this performance audit from January 2008 to February 2009,
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
Results in Brief:
CBP and NMFS conduct several activities to help detect and prevent
seafood fraud; however, FDA has taken few actions because it sees food
safety as its top priority. These agency activities are described in
the following text:
* CBP focuses on detecting schemes to avoid paying customs duties as
seafood products enter the country, such as transshipment to avoid
antidumping duties. CBP's import specialists review seafood import
documentation on product type, value, and country of origin to ensure
that importers have paid the appropriate duties. The agency also uses
information provided by one of its National Targeting and Analysis
Groups to help identify potentially fraudulent seafood shipments. This
group analyzes data on foreign producers and importers that may be
involved in transshipment schemes to avoid paying antidumping duties
and works with port officials to examine these shipments as they
arrive. For example, Chinese shrimp have been subject to an antidumping
duty since 2005 because producers have set prices on the shrimp that
were lower than the normal value. On the basis of this information and
allegations from the domestic shrimp industry, a National Targeting and
Analysis Group began to scrutinize imports of shrimp from Chinese
producers and identified approximately $6 million worth of Chinese
shrimp that had been transshipped through Indonesia in 2005 to avoid
antidumping duties.
* NMFS's seafood fraud detection activity consists of a voluntary, fee-
for-service inspection program that supports the seafood industry in
two ways. First, seafood retailers, such as supermarkets, may ask NMFS
to inspect the seafood products they purchase to ensure the products
have not been misrepresented. In such cases, NMFS's inspectors verify a
product's net weight and ensure the species is correctly identified.
Second, seafood processors may ask NMFS, through its Quality Management
Program, to inspect their seafood processing operations to not only
ensure compliance with FDA's HACCP regulations but also to identify
measures that can help prevent seafood fraud. Such measures may include
requiring the processor to weigh all products and compare that
information with the stated weight on the package before the product
leaves the facility and periodically testing the scales. According to
officials in NMFS's Seafood Inspection Program, NMFS inspects
approximately one-third of the seafood consumed in the United States.
* FDA sees ensuring the safety of the nation's food supply as a top
priority and, therefore, devotes minimal resources to detect and
prevent seafood fraud. Nevertheless in the course of conducting its
food safety activities, FDA has at times incidentally uncovered seafood
fraud. More specifically, as part of its food safety activities to
ensure that imports are not contaminated, among other things, FDA
examines imported seafood products, which occasionally has resulted in
its identifying seafood fraud. However, FDA's opportunities to identify
fraud are limited because it examines only about 2 percent of imported
seafood. FDA is also limited in its ability to detect seafood fraud
because its primary oversight program for seafood processors--HACCP--
does not require them to identify and mitigate economic fraud risks
that can occur during processing. However, seafood oversight programs
operated by NMFS and the Canadian government include such requirements.
An FDA seafood fraud-related activity is the maintenance of a publicly
available list of scientific and market names of seafood--the Seafood
List--that is intended to help the seafood industry comply with FDA's
regulations on product mislabeling. However, FDA did not fully update
the publicly available list it created in 1993 until January 2009, and
does not provide stakeholders with an opportunity to comment on
proposed changes before they are finalized. In addition, FDA provides
guidance to seafood processors to help ensure that their seafood
products are safe. However, this guidance does not reflect the seafood
labeling requirements in the Food Allergen Labeling and Consumer
Protection Act of 2004, which requires that the species of fish or
shellfish be included on product labels to notify consumers who may be
allergic to a particular species of fish. According to a senior FDA
official, the act's labeling requirements also could help detect and
prevent species substitution, since processors would need to verify the
species of fish or shellfish to ensure accurate labeling. Because the
seafood HACCP regulations do not address economic fraud risks; the
Seafood List, until very recently, had not been kept up to date; and
FDA's guidance does not reflect the allergen labeling requirements, the
seafood industry may be less vigilant in ensuring their seafood
products are correctly labeled and the public may more often encounter
seafood products that are not what they are advertised to be.
Consequently, we are recommending that FDA improve its ability to
detect and prevent seafood fraud by (1) proposing amendments to its
HACCP regulations to include measures to identify and mitigate economic
fraud risks; (2) providing the opportunity for stakeholder comments
prior to formalizing any changes to the Seafood List and routinely
updating the public list; and (3) updating its guidance to reflect the
seafood labeling requirements of the Food Allergen Labeling and
Consumer Protection Act of 2004.
The federal agencies that share responsibility for detecting and
preventing seafood fraud--CBP, NMFS, and FDA--do not efficiently and
effectively collaborate with each other, which can diminish the
efficiency and effectiveness of their efforts. Specifically, these
agencies have not worked together to identify a common goal related to
seafood fraud, established joint strategies to achieve such a goal, or
agreed on their roles and responsibilities. Moreover, they have not
identified ways to maximize and leverage their resources or established
processes and policies for working together systematically across
agency lines. As a result, these agencies are not sharing important
information that could be helpful in detecting and preventing seafood
fraud. For example, when FDA reviews the labels of imported products to
identify potentially fraudulent labeling, it does not systematically
share the results of these reviews with CBP. If CBP had access to the
results of the labeling reviews, it could compare this information with
the labels on products entering the country and better determine
whether a product was mislabeled to avoid a customs duty or other
import restrictions. In addition, these agencies have not leveraged
their resources to address seafood fraud efficiently and effectively.
For example, NMFS's voluntary fee-for-service inspection program and
FDA's health and safety inspections are similar. However, an FDA
official said that the agency is not sure whether it can rely on NMFS
inspections, in part due to concerns about potential conflicts of
interest, because NMFS is paid by industry to conduct its inspections.
FDA raised this same concern to us in 2004 but added that it already
had agreements with NMFS to deal with seafood safety and inspections,
and that it would look at other ways to better leverage NMFS resources.
Nonetheless, FDA does not currently try to determine whether NMFS has
already inspected a seafood facility when it is deciding which
facilities to inspect. Consequently, some facilities may be "over-
inspected," while others are not inspected frequently enough. For
example, in fiscal year 2007, FDA inspected 104 seafood facilities that
were also inspected by NMFS; while FDA had not inspected 1,464 other
facilities since before fiscal year 2003. In addition, CBP, NMFS, and
FDA each has its own laboratory capability for, among other things,
determining the species of seafood samples they receive. The agencies
also use different testing methodologies and standards for species
identification and do not acknowledge each other's laboratory results,
nor do they generally share the species standards they have developed.
As a result, resources are not used efficiently or effectively. We are
recommending that CBP, NMFS, and FDA collaborate to (1) develop goals,
strategies, and mechanisms to efficiently and effectively share
information and resources related to seafood fraud detection and
prevention across agency boundaries and (2) create a federal agencywide
library of seafood species standards. In commenting on a draft of this
report, the Department of Commerce, representing NOAA; the Department
of Health and Human Services, representing FDA; and the Department of
Homeland Security, representing CBP, generally agreed with our
recommendations. Appendixes II, III, and IV contain reprints of the
departments' letters, respectively.
Background:
Seafood fraud can include a variety of illegal activities done for
economic gain and can occur at any point in the seafood supply chain.
The domestic seafood supply chain begins with the harvester--that is,
the people who catch or farm the seafood. From there, seafood products
are shipped to processors, which then produce fresh, frozen, breaded,
or cooked seafood. Processors or distributors then sell the seafood to
supermarkets or restaurants. The process is similar for foreign seafood
products, with one exception: these products enter the country through
an importer and then move on to a distributor. According to the
National Oceanic and Atmospheric Administration (NOAA), in fiscal year
2007, over 80 percent of the seafood consumed in this country was
imported, and shrimp was the most widely consumed seafood. Seafood
imports into the United States most frequently come from Canada, China,
and Thailand, according to the U.S. Department of Agriculture's (USDA)
Foreign Agriculture Service.
Federal investigations have identified incidents of seafood fraud. For
example, the Department of Homeland Security's Immigration and Customs
Enforcement (ICE)[Footnote 3] and NOAA's Office for Law Enforcement
investigation that began in 2004 identified seafood fraud that involved
smuggling and distributing mislabeled catfish into the United States
from Vietnam. According to the indictment, an individual and his
companies in Florida aided by exporters in Vietnam imported thousands
of pounds of catfish into the United States labeled as grouper to avoid
paying antidumping duties that the Department of Commerce had imposed
on Vietnamese catfish. The defendant pled guilty and was sentenced to
51 months in prison. The judge also ordered the companies to forfeit
property and pay over $1 million in restitution.
Seafood fraud can include a variety of illegal activities undertaken
for economic gain. Such fraud typically involves mislabeling the
seafood product and can include the following actions:
* Transshipment to avoid duties: Foreign producers may ship seafood
products on route to the United States through a third country to avoid
import duties by labeling the product's country of origin as the third
country and also to avoid regulatory controls such as FDA import
alerts.[Footnote 4]
* Over-treating: Processors may, for example, over-bread prepared
seafood products, use water-retaining chemicals, or over-glaze with an
ice covering to artificially increase the weight of seafood products
without indicating the true net weight of the seafood on the label.
* Species substitution: Participants in the seafood supply chain may
label a species of seafood as another species. Typically, a lower-
market-value species is labeled as a higher-market-value species to
realize a larger profit. This results in consumers paying too much for
the product.
* Short-weighting: Participants in the seafood supply chain may label
packages of seafood as containing more than they actually contain.
* Other mislabeling and misrepresenting: Participants in the seafood
supply chain may provide various types of incorrect information about
the seafood product or can commingle two or more different products
having different values but sell the entire lot at the value of the
highest priced product.
Seafood fraud is an inherently deceptive activity and poses challenges
for federal agencies to detect and prevent it while still maintaining
the flow of legitimate seafood goods into and within the United States.
Some fraudulent activity can even occur openly. For example, seafood
companies receive public, written solicitations to purchase fraudulent
seafood products. One type of solicitation offers to sell packages of
fish fillets that are purposely mislabeled as another fish type to
avoid antidumping duties and also capitalize on the higher market value
of the falsely labeled fish type. These fish fillets are sold at a
discount to the initial buyer, but then can be fraudulently resold for
a higher price. Another type of solicitation offers to sell short-
weight packages of seafood at a discount that the buyer could then
fraudulently resell at the full price on the basis of the labeled
package weight.
Federal, state, and local agencies play a role in detecting and
preventing seafood fraud throughout the supply chain. In general,
federal agencies inspect seafood processors, distributors, and
importers and imported seafood products. States also inspect seafood
processors either through contracts with FDA or under their own
authority. States and local governments inspect and regulate retail
establishments such as restaurants and supermarkets.
CBP's trade-related responsibilities include assessing the final
customs duties, including antidumping duties, due on imports and
collecting those duties. All goods imported into the United States are
subject to a rate of duty, which may be free for certain products. The
U.S. government has established a duty rate according to the product
classification code--for example, fish sticks and other fillets that
are breaded or coated with batter have a specific classification code
and duty rate.[Footnote 5] Antidumping and countervailing duties may
also be required on imported products. The U.S. government may impose
antidumping duties on products exported to the United States at
unfairly low prices (i.e., dumping) and countervailing duties on
products exported to the United States that were subsidized by foreign
governments. The Department of Commerce sets these duty rates for
specific products, countries or manufacturers, or any combination of
these factors.
NMFS provides voluntary fee-for-service inspection services through its
Seafood Inspection Program on request to the seafood industry,
primarily under the authority of the Federal Agricultural Marketing Act
of 1946. NMFS provides its services to domestic and foreign seafood
firms to help them ensure compliance with all applicable federal food
regulations, including FDA's seafood HACCP regulations. NMFS's services
include inspections of a firm's processes and products to identify food
safety and economic fraud risks as well as laboratory analyses.
Along with its responsibility for ensuring the safety of other food
products under the Federal Food, Drug, and Cosmetic Act, FDA has the
primary responsibility for ensuring that the nation's seafood is safe,
wholesome, and properly labeled.[Footnote 6] To carry out these
responsibilities, FDA has created oversight programs designed to, among
other things, examine and sample imported seafood products, inspect
domestic and foreign seafood processors and importers, and assist state
and local governments in their efforts to regulate retail
establishments such as restaurants and supermarkets. Under the HACCP
regulations, seafood processors are required to prepare and maintain a
plan identifying critical points in the processing where contamination
is reasonably likely to occur and implement control techniques to
prevent or mitigate the contamination. FDA then inspects U.S. importers
and domestic and foreign seafood processors to ensure their compliance
with these HACCP regulations. When FDA first proposed the seafood HACCP
regulations in 1994, the agency recommended that HACCP plans include
controls for nonsafety hazards such as economic adulteration.
Specifically, FDA recommended that the seafood industry adopt
preventive processing measures to help ensure that, among other things,
seafood was correctly identified and its weight properly recorded.
Furthermore, FDA also proposed guidelines on how a seafood processor
could use a HACCP-based approach to ensure that fish and fishery
products were in compliance with the economic adulteration and
misbranding provisions of the Federal Food, Drug, and Cosmetic Act.
However, in finalizing its HACCP regulations, FDA eliminated these
economic fraud controls. In discussing its reasoning for eliminating
the economic fraud controls in the Federal Register, FDA stated that
the seafood HACCP system would need to mature before the agency could
determine whether it should address matters other than food safety
hazards, such as economic fraud.
The seafood industry also plays a role in detecting and preventing
seafood fraud. Seafood industry associations represent various aspects
of the industry throughout the supply chain, from harvesters to
retailers. They include product-specific associations, such as the
Southern Shrimp Alliance in southern states or the Maine Lobster
Promotion Council, or business-specific associations, such as the
National Restaurant Association. These industry associations work to
protect the brand name and quality of their respective products or
businesses; monitor issues and legislation that may impact the
industry, including fraud and other illegal activities; and work with
government agencies and other organizations to promote the health and
viability of their industry. Some of these associations have also
provided federal agencies with information on potential seafood fraud,
such as transshipping schemes to avoid antidumping duties and
advertisements for short-weighted seafood products. In addition, the
National Fisheries Institute (NFI) also created the Better Seafood
Bureau to help its members combat such seafood fraud problems as
transshipping to avoid antidumping duties, species substitution, and
short-weighting.[Footnote 7] According to NFI, the goal of the Better
Seafood Bureau is to promote economic integrity in the seafood industry
and assure customers of the quality of the institute's members'
products. NFI requires a hand-signed contract from each member's Chief
Executive Officer that he or she will comply with all U.S. laws and
regulations, and has created an accountability system that requires
members who break the contract to pay for a third-party audit of its
processes.[Footnote 8] The Southeastern Fisheries Association also
developed the Seafood Product Quality Code in 1984 to educate any
interested harvesters, processors, distributors, wholesalers,
retailers, and consumers on standards and measures to promote product
quality and build confidence in the seafood industry.
Federal agencies face challenges in achieving their missions,
especially if they have limited resources and some elements of their
missions are shared with other agencies. Effective collaboration is
often key to overcoming these challenges, and our previous work has
identified practices that can help enhance and sustain collaboration.
[Footnote 9] First, collaboration requires agency staff, working across
agency lines, to define and articulate the common federal outcome or
goal they are trying to achieve. Second, once a common goal is
established, agencies need to develop joint strategies. Such strategies
help align the partner agencies' individual activities and resources to
contribute to accomplishing the common goal. Third, the agencies should
work together to agree on their roles and responsibilities. By agreeing
on their roles and responsibilities, agencies can clarify who will do
what, organize their joint and individual efforts, and determine who
will lead the collaborative effort. Fourth, because each agency may
contribute different activities and levels of resources toward
achieving the common goal, by assessing their relative strengths and
weaknesses, collaborating agencies can identify opportunities to
leverage each other's resources. This may lead to additional benefits
that would not have been available if they were working separately.
Fifth, to ensure consistent implementation of their activities and a
sustained collaborative effort to achieve the common goal, the agencies
should develop compatible policies and procedures for all of the
agencies to follow. (Appendix I includes a list of the three other
collaboration practices we previously identified but did not address in
this report.)
CBP and NMFS Take a Variety of Actions to Detect and Prevent Seafood
Fraud, While FDA Takes Few Actions Related to Seafood Fraud:
CBP focuses on detecting schemes to avoid paying customs duties by
reviewing import information; targeting and, along with ICE,
investigating potential seafood fraud perpetrators; and taking
enforcement actions, if warranted. NMFS offers a voluntary, fee-for-
service seafood inspection program that can detect seafood fraud, such
as short-weighting, and may also help prevent seafood fraud by
identifying economic fraud risks during processing. However, NMFS
inspects approximately one-third of the seafood consumed in the United
States. FDA directs its field staff to minimize work on economic fraud
issues because it considers food safety a higher priority than economic
fraud. Nonetheless, FDA's health and safety actions, such as
examinations of seafood imports, sometimes uncover seafood fraud
incidentally. FDA's primary regulatory program for domestic seafood
processors--HACCP--does not address the economic fraud risks also
associated with processing. In addition, while FDA maintains a list of
scientific and market names of seafood that is intended to help the
seafood industry comply with FDA's regulations on product mislabeling,
until January 2009, FDA had not fully updated the publicly available
list it created in 1993, despite having made numerous changes since
then. Finally, the guidance FDA provides to seafood processors to help
ensure that their seafood products are safe does not reflect the
seafood labeling requirements in the Food Allergen Labeling and
Consumer Protection Act of 2004, which could incidentally help detect
and prevent species substitution, since processors would need to verify
the species of fish or shellfish to ensure accurate labeling.
CBP Takes a Variety of Actions to Detect Schemes to Falsify Import
Information and Thereby Avoid Paying Import Duties:
For imported seafood to enter U.S. commerce, the importer must file for
entry with CBP and submit electronic or paper entry documents to CBP.
The entry documents include basic information about the imported
product, such as its type, quantity, and value. As the first step, port
officials select some of these entry documents to review to determine
whether to allow the imported product, including seafood, to enter U.S.
commerce.[Footnote 10] However, due to the large number of goods
imported into the United States, port officials can only examine a
fraction of incoming shipments. For example, from fiscal years 2004 to
2008, CBP officials examined between approximately 1.0 to 2.4 percent
of all seafood imports. Importers must file additional documents (known
as "entry summary" documents) and pay the appropriate duties, taxes,
and fees on imported merchandise for consumption, including seafood
products, within 10 days after CBP releases them from its custody.
CBP's import specialists and other port officials select some entry
summary documents to review to ensure accurate duty collection, which
includes some seafood. For example, Chinese shrimp and crawfish and
Vietnamese frozen fish fillets are subject to antidumping duties. On
the basis of these reviews, CBP officials select importers for further
review whose documentation indicates that they may be trying to avoid
paying the appropriate duties.
In addition, CBP operates a national statistical sampling program,
known as the Compliance Measurement Program, which randomly selects
shipments of imports by commodity for review or examination to
determine the degree to which they comply with customs trade laws and
regulations, among other things. The Compliance Measurement Program was
designed to identify trade problems or patterns of deception for
specific commodities so that CBP officials can then focus their efforts
against these illegal or fraudulent activities. Port officials only
review a limited number of seafood entries under the program. For
example, in fiscal year 2007, import specialists from all ports in the
United States examined 766 seafood product entries out of 390,799 such
entries and found a high compliance rate, 97.3 percent, for the
applicable trade revenue laws. Although the Compliance Measurement
Program could uncover seafood fraud or duty evasion, CBP officials
noted that in-depth investigative work may be needed to uncover schemes
to willfully defraud the U.S. government, which is beyond the scope of
the examinations conducted under the program.
Another step CBP takes to detect and prevent seafood fraud is to target
shipments that CBP officials suspect are part of a scheme to evade
customs duties. CBP has five National Targeting and Analysis Groups
(NTAG) that develop criteria to target potentially fraudulent imports.
One of these NTAGs develops criteria to target potentially fraudulent
shipments of seafood and reviews leads from other CBP officials and
external organizations, such as trade associations, on transshipping
schemes to avoid paying antidumping and countervailing duties. This
NTAG researches and monitors trade trends to identify changes or
patterns in trade that may signal potential fraudulent activity. For
example, as part of their 2005 inquiry into an allegation of illegal
transshipment of Chinese shrimp through Indonesia, the NTAG staff
reviewed information on the shippers of Indonesian shrimp before and
after the antidumping duty order for Chinese shrimp was put in place.
They found a sharp decrease in shrimp imports from China after the
antidumping duty order was issued in early 2005 and a concurrent
increase in shrimp imports from Indonesia, among other countries. The
NTAG staff enlisted the support of ICE to investigate Indonesian shrimp
exporters who they suspected were illegally transshipping Chinese
shrimp. They found that some Indonesian firms were importing Chinese
shrimp and then shipping them to the United States labeled as
Indonesian shrimp. CBP found that, in 2005, approximately $6 million
worth of Chinese shrimp had been illegally transshipped through
Indonesia to avoid antidumping duties.
While the illegal transshipment of Chinese shrimp continued through a
different transshipping point, this time it also had a health-and food-
safety-related effect. In June 2007, FDA announced a countrywide import
alert on five Chinese-farmed seafood products, including shrimp. This
import alert required that all Chinese shrimp be detained and refused
entry, unless the importer could prove the absence of unapproved drugs
in the shrimp. On the basis of industry information and CBP and ICE
investigations, CBP determined that Chinese shrimp was being
transshipped to the United States through Malaysia. Due to this illegal
transshipment, importers of Chinese shrimp were able to circumvent not
only the 2005 antidumping duty but also FDA's recent import alert. In
September 2007, CBP tested shipments of suspected Chinese shrimp
illegally transshipped through Malaysia for the presence of unapproved
drugs and found some contaminated shrimp. On the basis of CBP's
information, in March 2008, FDA issued a new import alert requiring
importers of shrimp from one Malaysian manufacturer to prove the
absence of unapproved drugs prior to entering future shipments of
shrimp into U.S. commerce.
In 2007, the NTAG that works on seafood fraud issues also helped
identify another scheme importers were using in their attempt to evade
antidumping duties on Chinese shrimp. Under this scheme, importers
provided CBP with fraudulent information on the product type to evade
antidumping duties. A precursor to breaded shrimp called "dusted
shrimp" was exempted by the Department of Commerce from the antidumping
duty order on imported Chinese shrimp.[Footnote 11] On the basis of
allegations from the U.S. shrimp industry, CBP initiated an intensive
examination and sampling operation to determine whether importers were
bringing in shipments of falsely declared dusted shrimp to avoid the
antidumping duties on Chinese shrimp. Over the course of a 90-day
period, CBP found that of the 81 alleged dusted shrimp entries examined
and sampled, approximately 64 percent of the shipments did not meet the
criteria to qualify as dusted shrimp. The potential loss of trade
revenue from these fraudulent dusted shrimp shipments was approximately
$5 million. Extrapolating back to when the antidumping duty order first
became effective in 2005, CBP concluded that the importers caught
importing these fraudulent dusted shrimp imported approximately $117
million worth of potentially fraudulent dusted shrimp with a possible
loss of trade revenue from the uncollected antidumping duties of $132
million.
CBP's Office of Regulatory Audit provides additional support with
suspected transshipping incidents to determine whether importers are
participating in schemes to evade duties. CBP audits importers to
ensure that they have reported and paid all trade revenue, such as
antidumping duties, as required under trade laws and agreements. They
perform two types of audits--a quick-response audit, which focuses on a
specific issue, and a focused assessment audit, which evaluates all of
a company's CBP activities and controls. The quick-response audits are
focused on detecting fraudulent practices, such as unlawful
transshipment of seafood to evade antidumping duties. For example, a
quick-response audit concluded in 2007 found that an importer did not
pay approximately $2.2 million in antidumping duties on imported
Chinese shrimp that was transshipped through Indonesia. The focused
assessment audits are comprehensive audits where the auditors review
and test the company's management oversight processes or "internal
controls" to identify areas of uncollected trade revenue, such as
unpaid antidumping duties. The focused assessment audits have included
seafood importers, but they have only uncovered one violation since
2005 that was related to seafood fraud.
Finally, in the event CBP identifies violations of laws, it can assess
penalties against an importer. The maximum penalty amount that CBP can
assess varies, depending upon whether the perpetrator's actions were
fraudulent, negligent, or grossly negligent. Penalties can range from
two to four times the loss of lawful duties, taxes, and fees to the
U.S. government or the domestic value of the merchandise. In addition,
CBP may cooperate with other agencies to pursue criminal charges
against perpetrators of seafood fraud. For example, in July 2003, CBP
cooperated with ICE to investigate a case where, according to ICE
officials, one exporter and several importers conspired to evade
antidumping duties in excess of $3 million on freshwater crawfish.
According to these officials, the coconspirators were indicted for
smuggling and conspiracy in November 2003, and one defendant was
convicted of conspiracy in 2004.
NMFS's Voluntary, Fee-for-Service Seafood Inspection Program Helps
Industry Detect and Prevent Seafood Fraud:
NMFS offers two types of services to help industry address seafood
fraud. NMFS provides these voluntary, fee-for-service inspection
services through its Seafood Inspection Program. This program currently
serves approximately 375 domestic seafood firms and 63 foreign seafood
firms, and, according to senior officials in NMFS's Seafood Inspection
Program, NMFS inspects approximately one-third of the seafood consumed
in the United States. First, NMFS inspects shipments (known as "lots")
of seafood products purchased by its clients that include retailers
such as supermarkets. During lot inspections, inspectors take a random,
representative sample from the seafood lot and may perform several
tests on this sample, including weighing it to ensure that the actual
weight matches the labeled package weight. NMFS inspectors have
identified instances of seafood fraud, especially short-weighting, in
seafood products processed domestically and in foreign facilities. NMFS
also may be able to uncover species substitution during a lot
inspection in two ways: (1) according to senior officials in NMFS's
Seafood Inspection Program, NMFS inspectors are trained to visually
differentiate between different types and species of fish and (2)
inspectors can use the capabilities of NOAA's National Seafood
Inspection Laboratory to test for and identify the species of seafood.
However, NMFS does not maintain a comprehensive list of all lot
inspections conducted and, thus, does not have the ability to determine
the frequency with which it uncovers fraudulent seafood products.
Second, NMFS also offers a Quality Management Program that can help
seafood processors decrease the potential for fraudulent seafood by
applying HACCP principles to both food safety and economic fraud risks.
In 2007, NMFS inspected 202 domestic seafood companies under its
Quality Management Program. As part of this program, NMFS inspects
seafood processors to ensure their compliance with FDA's seafood HACCP
regulations that require processors to identify potential food safety
hazards during processing and establish controls to mitigate them. NMFS
also goes a step further and requires that seafood processors that
choose to participate in the Quality Management Program (1) create a
"Defect Action Plan," which identifies potential economic fraud risks
during the processing of seafood, such as short-weighting, and (2)
develop measures to mitigate those fraud risks. For example, the plan
could require that samples of the finished seafood product be removed
from the processing line every hour and the weight checked to ensure
that the actual weight and the weight as stated on the package are the
same. If any short-weights were identified, then all products since the
last check would be weighed again, and the content amounts would be
corrected. Also, the scales used in the processing phase would be
checked and recalibrated, if necessary. In addition, processors can
inspect seafood products upon receipt and compare the processors'
species identification with the species listed on the invoices. Through
these measures, processors can provide some assurance against short-
weighting and species substitution.
FDA Considers Economic Issues a Low Priority Compared with Health and
Safety Issues, but It Has Incidentally Identified Instances of Seafood
Fraud:
FDA is responsible for ensuring that foods are safe, wholesome,
sanitary, and properly labeled. To that end, FDA is authorized to issue
regulations to enforce the Federal Food, Drug, and Cosmetic Act. The
act prohibits the misbranding or adulteration of food products, which
would include seafood products that have been mislabeled, substituted,
or over-glazed. FDA considers detecting violations like these a low
priority and devotes minimal resources to such work, according to
published program guidance and senior FDA officials. For example, FDA's
program guidance to its field staff on imported and domestic seafood
products states that no resources have been allocated for seafood fraud-
related work, and that resource expenditures in this area should be
kept to a minimum. According to FDA senior officials, the agency does
not have the staff or resources to address economic fraud in addition
to their food safety responsibilities, which they believe are a top
priority and more important.
Nevertheless, in the course of their work examining the safety of
seafood imports, FDA inspectors may uncover seafood fraud. FDA
inspectors review import entry information, such as the type of seafood
being imported and the importer's history of violations, if any;
physically examine the imported goods; and collect samples for
laboratory analysis to identify those that are potentially in violation
of U.S. food regulations and laws. FDA may refuse to allow an imported
seafood product to enter U.S. commerce if it appears to be adulterated
or misbranded or for other violations of regulations and laws that FDA
administers. However, from fiscal years 2003 to 2008, only 1 percent of
the refusals of imported seafood products were related to seafood
fraud.
FDA also maintains an "import alert" list to detain entries of imported
foods that appear to have significant recurring violations. FDA
currently has three import alerts related to seafood fraud. One import
alert lists 10 foreign firms that were found to have declared an
assortment of seafood products under the name of a fictitious,
incorrect, or substituted species. The other two import alerts provide
information to FDA's field staff about the potential mislabeling of two
specific types of fish--catfish and red snapper. The import alerts
inform field office staff of the species of fish that can legally be
labeled as catfish or red snapper and guidance on how to handle
incoming shipments that may not be accurately labeled. However, FDA
officials only physically examine a small percentage of imported
seafood--about 2 percent of all seafood entries from fiscal years 2003
to 2008. Of the 2 percent of imported seafood examined by FDA
officials, approximately 0.05 percent of these examinations were
related to seafood fraud.
FDA's primary oversight program for domestic seafood firms is the HACCP
program, but the focus of this program is health and safety not
economic fraud. FDA's seafood HACCP regulations require seafood
processors to identify and establish controls to mitigate potential
food safety hazards. FDA inspects domestic firms involved in the
production, storage, and distribution of fish and fishery products to
ensure that their HACCP plans are properly designed and implemented.
However, FDA inspectors spend very little time looking for seafood
fraud. For example, the percentage of domestic seafood firm inspections
where investigators conducted seafood fraud work was approximately 0.5
percent from fiscal years 2003 to 2008. FDA also inspects some
importers and foreign processors for HACCP compliance because, as the
agency noted in publishing its final HACCP regulations, the importer
and foreign processor share responsibility in complying with importing
regulations. Importers are required either to (1) obtain seafood
products from a country that has an active memorandum of understanding
or similar agreement with FDA that documents the equivalency or
compliance of the foreign inspection system with the U.S. system or (2)
implement written verification procedures to show that the foreign
processor has complied with the HACCP regulations. Furthermore, FDA
inspects foreign fish and fishery processors that export seafood to the
United States, but this number of inspections is very limited. For
example, in fiscal year 2007, FDA inspected only 61 of 14,569
registered foreign seafood firms.
In its 1994 seafood HACCP proposed rule, FDA recommended that seafood
firms use HACCP-like measures to control for economic fraud because, as
FDA stated, seafood fraud could also impact food safety. In the
proposed rule, FDA stated that the " ... misidentification of species
may also have adverse public health consequences."[Footnote 12] The
connection between economic fraud and food safety can be seen in an
incident in 2007 where two individuals became ill after eating puffer
fish. According to FDA, the puffer fish was imported into the country
mislabeled as monkfish. Unlike monkfish, puffer fish contains a
potentially deadly toxin called tetrodotoxin. CBP and ICE's shrimp
transshipping investigation also highlights the connection between
economic fraud and food safety. CBP and ICE's investigation found that
foreign manufacturers and importers were not only attempting to
circumvent antidumping duties by sending Chinese shrimp to the United
States through Malaysia, but these companies were also evading an FDA
import alert aimed at stopping adulterated Chinese shrimp from entering
the United States. Incidents like these and others have led FDA
officials, including a senior official in FDA's Office of Food Safety,
to reconsider the agency's limited level of effort regarding economic
fraud because they now believe that, if left unregulated, over time,
seafood fraud may create food safety problems. Specifically, that same
official said that it may be time for FDA to reconsider incorporating
nonfood safety hazards, such as economic fraud, in the seafood HACCP
regulations. According to senior FDA officials, the agency can still
take actions, such as reviewing labels and issuing import alerts to
prevent seafood fraud. However, these officials acknowledged that
requiring measures in HACCP to address seafood fraud would build
prevention into the processing of seafood. In addition, NMFS officials
that administer the agency's Quality Management Program believe that
amending FDA's HACCP regulations to include measures to address
economic fraud risks would require minimal resources for the seafood
industry and FDA to implement. Moreover, according to officials in the
Canadian Food Inspection Agency, Canada has a program similar to NMFS's
program that requires seafood processors to identify and mitigate both
food safety hazards and economic fraud risks. However, because FDA
inspectors primarily inspect for compliance with HACCP regulations,
until the agency amends the HACCP regulations to include measures to
identify and mitigate economic fraud risks, its inspectors will
continue to spend limited time ensuring against mislabeled products,
and seafood processors may be less attentive to protecting against
fraud.
Another opportunity for FDA officials to detect seafood fraud is during
their review of food labels. According to officials in FDA's Division
of Import Operations and Policy, food label reviews sometimes occur
during HACCP inspections of domestic seafood processors and
examinations of imported seafood products. According to FDA guidance,
investigators are to review labels on at least three food products when
conducting a domestic or foreign firm inspection. The review entails
ensuring that the label complies with all relevant food label laws and
FDA regulations. For example, the Federal Food, Drug, and Cosmetic Act,
as amended, prohibits the "misbranding" of food, which includes, among
other things, labeling that is false or misleading. In addition, food
labels must generally include an ingredients list that identifies the
product's ingredients by their common or usual names in order of
predominance by weight. Food labels must also accurately state the
contents in terms of weight, measure, or numerical count of the
product. However, our September 2008 report found that FDA does not
have reliable data on the number of labels reviewed, nor does it track
the complete and timely correction of the violations it identifies
during the reviews.[Footnote 13] As a result, FDA cannot provide
reliable information on the number of label reviews that identified
seafood fraud, nor on any corrections of the seafood fraud violations
it identified.
FDA may also detect seafood fraud through complaints from industry
associations. For example, on several occasions during 2008, NFI
provided FDA with copies of public, written solicitations from foreign
and domestic companies offering to sell packages of seafood packed to
80 or 90 percent of the labeled package weight for a discount. These
short-weighted products could then potentially be fraudulently sold in
U.S. commerce for the full price on the basis of the labeled package
weight. According to an FDA Consumer Safety Officer, FDA wanted NFI to
provide additional information on these companies, such as their
locations, because some of these companies were not in FDA's inventory
of seafood processors or importers, and FDA could not identify them
with certainty. However, we found that some of the companies were
listed in FDA's inventory because FDA had previously inspected them.
According to a senior FDA official, FDA is still working with NFI on
this matter; however, as of December 2008, the agency had taken no
action against any of the companies that sent solicitations.
In addition, FDA may detect seafood fraud from consumers and others who
contact FDA field staff, by telephone, to complain about issues such as
suspected short-weighted seafood products or species substitution. For
example, in one case, a consumer complained to FDA about frozen shrimp
mislabeled as a product of Mexico when a second label underneath the
first indicated that it was a product of Thailand. Typically, the FDA
District Consumer Complaint Coordinator would field the telephone call,
collect information from the consumer, such as the description of the
product and the problem with the product, and would attempt to
determine the responsible seafood firm. The Complaint Coordinator or
other FDA field staff would evaluate the complaint and determine
whether immediate action is required or whether the information would
be used for surveillance in the next inspection of the seafood firm.
However, our 2008 food labeling report found that FDA program managers
could not use FDA's data system that captures consumer complaints to
track their timely and appropriate resolution because these data were
not entered into the system in a manner that would facilitate analysis.
Specifically, standard terminology was not used and information on
complaint resolutions was captured in different data fields.[Footnote
14] We found similar issues regarding the follow-up of consumers'
complaints of seafood fraud. We reviewed FDA summary data for 105
consumer complaints related to such things as misbranded, mislabeled,
and short-weighted seafood products from fiscal years 2004 through
2007. We judgmentally selected and reviewed FDA's internal documents
for 5 of 105 consumer complaints and found that for all 5 of the
complaints, FDA indicated that it would follow up on the complaints
during the next inspection of the firm that had produced the seafood
product in question. However, we found no information in FDA's
inspection reports to indicate that FDA had followed up on three
complaints. There was no inspection report available for the fourth
complaint, and for the fifth complaint, there was a report for an
inspection that was conducted a few days prior to the filing of the
complaint.
There are several actions that FDA can take if seafood fraud is
discovered during an inspection of a seafood firm. FDA may issue a
warning letter--which is a notice that enforcement actions may be
forthcoming if corrections are not made--to firms for serious
violations of regulatory significance. For less serious violations, FDA
may send an untitled letter, which is an informal communication that
corrective actions are needed. However, FDA issued no warning letters
or untitled letters regarding seafood fraud from fiscal years 2005
through 2008. Additionally, FDA may initiate enforcement actions
against seafood firms, such as seizing and removing seafood from the
marketplace; obtaining an injunction to stop a company from engaging in
behavior that violates certain prohibitions of the Federal Food, Drug,
and Cosmetic Act and regulations; or barring seafood firms from
importing goods into the United States. FDA, however, has not taken any
of these actions for seafood fraud violations since 2000, according to
a senior FDA official. However, FDA's Office of Criminal Investigations
has investigated allegations of seafood fraud and provided information
to the Department of Justice for legal action against the perpetrators.
FDA helps the seafood industry avoid species substitution by
maintaining on its agency Web site a publicly available "Seafood List,"
which is a compilation that includes the scientific and market names
for imported and domestic seafood. The Seafood List is intended to
promote uniformity in the use of FDA-acceptable market names by the
seafood industry and to provide consistent advice on these names. For
example, "catfish" can only be used as a market name for fish that
belong to the family Ictaluridae, even though there are other species
of fish whose vernacular name may include the word catfish. However,
before January 2009, the public version of the Seafood List had not
been kept up to date. According to an FDA official responsible for the
Seafood List, even though over 400 changes have been made to FDA's
internal version of the list since 1993, only about 22 changes had been
made to the public version of the list as of the end of 2008. However,
in January 2009, FDA made the revised and fully updated list available
to the public on its Web site.
Other countries, such as Canada and Australia, maintain a similar type
of Seafood List. However, their policies and procedures for maintaining
these lists differ from those of FDA. For example, Canada publishes on
the Internet guidelines and criteria that it uses to assign a new name
for a species of seafood. In addition, the Canadian government will not
allow a new name for a fish if it is similar or resembles the name of a
fish with a higher market value. Also, changes made to Canada's seafood
list are disseminated to an e-mail distribution list that interested
parties can join. In contrast, until January 2009, FDA did not provide
information to the public on the guidelines or criteria that it used to
determine acceptable market names for seafood. In addition,
stakeholders do not have the opportunity to comment on proposed changes
to the Seafood List, unless the change was required by law or
regulation. In contrast, Australia allows for a 3-month public
consultation period prior to finalizing the change. A senior FDA
official told us that stakeholders can write to FDA at any time with
comments about the Seafood List, but that there is no formal comment
period before changes are made to the list because it is considered
guidance, not an agency regulation.
A recent example of a change to the Seafood List illustrates some of
these issues. In April 2005, FDA allowed a restaurant to advertise
langostino--with the common names "squat lobster" and "Colorado
langostino"--as "langostino lobster." However, as of December 2008, the
publicly available Seafood List had not been updated to reflect this
change. According to the list on December 10, 2008, the market name for
langostino is "langostino," and the common names are "squat lobster" or
"Colorado langostino." Furthermore, according to officials from the
Maine Lobster Promotion Council, the council wrote to FDA to protest
this change to the naming of langostinos because it allows a lower-
market-value seafood, langostinos, to take advantage of the higher
market value and reputation of the American lobster name.[Footnote 15]
According to officials from the Maine Lobster Promotion Council, FDA
did not respond to its inquiries regarding the reasons for the name
change for langostinos. An FDA official responsible for the Seafood
List told us that FDA responded to the council by e-mail in August 2008
stating that, "we have not objected to use of the term langostino
lobster for various species of squat lobsters."
According to a senior FDA official, seafood labeling requirements from
the Food Allergen Labeling and Consumer Protection Act of 2004 may help
prevent species substitution, but FDA has not updated its guidance to
the seafood industry to fully reflect the act's labeling requirements.
The act requires the product label to contain the name of a food source
from which a major food allergen is derived, and, when the major food
allergen is fish or Crustacean shellfish, the specific species of fish
or shellfish must be listed to notify consumers with food allergies of
a particular type of fish species. According to the same FDA official,
the act's labeling requirement may help detect and prevent species
substitution, since processors would need to verify the type of fish or
shellfish they are processing to ensure accurate labeling. However,
these seafood labeling requirements are not reflected in FDA's guidance
to the seafood industry on the development of their HACCP plans to
prevent and control the health and food safety hazards associated with
seafood--the Fish and Fisheries Products Hazards and Controls Guidance.
[Footnote 16] According to a senior FDA official, seafood processors
should be aware of the act's requirements, and FDA can still enforce
those requirements, even if they are not reflected in the guidance.
Even so, senior FDA officials told us that they plan to update the
guidance to reflect the Food Allergen Labeling and Consumer Protection
Act of 2004 labeling requirements, but they could not provide us with a
publication time frame.
Limited Collaboration Exists among the Key Agencies Responsible for
Detecting and Preventing Seafood Fraud:
Limited collaboration among CBP, NMFS, and FDA to detect and prevent
seafood fraud can diminish their efficiency and effectiveness in
dealing with this issue. CBP, ICE, FDA and its Office of Criminal
Investigations, and NOAA's Office for Law Enforcement have worked
together on criminal cases against individuals and companies suspected
of committing seafood fraud. CBP, ICE, and FDA are working together to
target commodities that pose health and safety risks, and NMFS and FDA
have worked on joint laboratory efforts to share standards for seafood
species identification. However, CBP, NMFS, and FDA have not
established common goals related directly to detecting and preventing
seafood fraud or joint strategies to help achieve the goals. In
addition, these key agencies have not established policies and
procedures to promote effective collaboration and better leverage
resources to achieve their common goal. As a result, the agencies have
not taken advantage of opportunities to share information that could
benefit each agency's efforts to detect and prevent seafood fraud, nor
have they identified similar and sometimes overlapping activities that
could be better coordinated to use limited resources more efficiently
and effectively.
CBP, NMFS, and FDA Have Not Taken Any of the Key Steps to Develop an
Enhanced Collaborative Working Relationship Related to Detecting and
Preventing Seafood Fraud:
CBP, ICE, FDA and its Office of Criminal Investigations, and NOAA's
Office for Law Enforcement have worked together on developing and
investigating criminal cases against individuals and companies
suspected of committing seafood fraud. For example, in one situation,
ICE and the Office for Law Enforcement developed a case against an
individual and his companies in Florida, who, aided by exporters in
Vietnam, imported thousands of pounds of catfish into the United States
labeled as grouper and other fish to avoid paying antidumping duties.
The case resulted in an indictment and a guilty plea by the defendant.
In addition, CBP, ICE, and FDA are working together to target
commodities that pose health and safety risks through Operation
Guardian, which is an enforcement initiative to deal with imported
substandard, tainted, and counterfeit products. Operation Guardian's
efforts have led to seizures of such commodities as pharmaceuticals,
steel components, honey, shrimp, and toys.
However, despite CBP, NMFS, and FDA having responsibilities related to
seafood fraud detection and prevention, these agencies have not
implemented key practices our previous work has identified that can
enhance and sustain collaboration among federal agencies.[Footnote 17]
Specifically, CBP, NMFS, and FDA have not worked with each other to (1)
identify their shared individual goals related to seafood fraud
detection and prevention and (2) develop a common overarching goal or
goals. Because these agencies have not identified a common goal, they
also have not implemented the next practices we identified for
effective collaboration and established joint strategies to achieve
that goal or agreed on their respective roles and responsibilities in
achieving the shared goal. The agencies also have not identified ways
to maximize and leverage their resources by agreeing on the resources
and activities each agency can commit to accomplishing the common goal,
nor have they established procedures and policies for working together
systematically across agency lines. Because the agencies have not
implemented any of the key practices that enhance collaboration, they
have missed opportunities to share data among themselves that could
enhance seafood fraud detection and prevention and leverage resources.
They also have not identified similar or overlapping activities that
could be better coordinated or consolidated so that limited funds would
be used more efficiently and effectively.
CBP, NMFS, and FDA Are Missing Opportunities to Share Information to
Better Detect and Prevent Seafood Fraud:
CBP, NMFS, and FDA each collect information on seafood products to meet
their respective responsibilities, but they do not always share
information that could be used to detect and prevent seafood fraud. CBP
collects information on seafood imports, such as product type, product
quantity, and country of origin, through the review and examination of
imported goods and import entry documents, audits, and laboratory
analysis. NMFS collects information in lot inspection reports that
identify short-weighted domestic and imported products. FDA collects
information on imported seafood products, such as the accuracy of
product labeling, through entry document reviews, food label reviews,
product examinations, inspections, and laboratory analysis. Some of the
information these agencies collect could be used to identify seafood
fraud, such as the names of the importers and the seafood products that
were illegally transshipped to avoid customs duties or were mislabeled.
However, these agencies have not developed procedures to identify or
share useful information. For example, CBP and FDA both find seafood
imports with inaccurate product type, weight, and country-of-origin
labels. By sharing this information, CBP and FDA would have more data
about violative imported products and could target those products with
the most violations or greater likelihood to be violative for more
frequent inspections. Additionally, CBP and FDA could compare
information each agency receives from importers on the product type and
country of origin to determine if this information is consistent, which
would help ensure that importers were not attempting to circumvent an
antidumping duty or an FDA import alert. An official in FDA's Division
of Import Operations and Policy told us that while there are no formal
mechanisms for sharing this information between FDA and CBP, FDA makes
referrals regarding violative imported products to CBP on an ad hoc
basis.
In addition to information on seafood products, CBP, NMFS, and FDA also
have information on seafood importers that each collects through audits
and inspections, respectively, but do not share this information with
each other. During an importer audit, CBP ensures that importers have
reported and paid all trade duties as required under trade laws and
agreements on the basis of the product documentation and labeling.
During an inspection of a seafood importer, FDA may review importer
documentation and collect samples to identify products not in
compliance with the Federal Food, Drug, and Cosmetic Act's labeling
requirements. FDA and CBP may both identify discrepancies in product
information supplied by seafood importers, such as declaring incorrect
information on import documents or having inadequate proof of
documentation, when checking for compliance with labeling requirements.
Because CBP and FDA do not share the results of their respective audits
and inspections, they do not have the most comprehensive information on
noncompliant seafood importers that could help identify those with a
greater likelihood of problems in the future. In addition, NMFS does
not share information with FDA from its lot inspections about importers
and processors that produced short-weighted seafood products on a
regular basis, so FDA could further investigate this concern during
future examinations or inspections.
In investigating illegal transshipment or other schemes to avoid
duties, CBP and ICE may require information on foreign seafood
producers critical to their investigations. However, CBP and ICE may be
denied access to the countries where the problematic seafood producers
are located. For example, in 2007, CBP and ICE were denied entry into a
country to investigate an alleged transshipping scheme to avoid paying
antidumping duties and, thus, could not collect crucial information
about the foreign seafood producers in question. CBP could potentially
benefit from information obtained from FDA and NMFS, both of which
conduct inspections of foreign seafood producers.[Footnote 18]
According to senior CBP and ICE officials, they would find information
from FDA's and NMFS's foreign inspections beneficial, depending on the
facts of particular enforcement activities they are pursuing.
Lack of Collaboration by CBP, NMFS, and FDA to Detect and Prevent
Seafood Fraud Has Resulted in Overlapping Actions and Inefficient Use
of Resources:
Not only does the lack of collaboration create inefficient information
sharing between the key federal agencies, it also creates overlapping
agency efforts and inefficient use of government resources. NMFS and
FDA have similar inspection programs--NMFS inspects facilities, on
request, for health, safety, and economic integrity issues, while FDA
focuses its inspections on health and safety concerns. However, an FDA
official said that the agency is not sure whether it can rely on NMFS
inspections, in part due to concerns about potential conflicts of
interest because NMFS is paid by industry to conduct its inspections.
FDA has identified these potential conflicts as an impediment to fully
using NMFS inspection efforts in the past. In our 2004 report on FDA's
imported seafood safety program, we stated that an official raised
concerns about potential conflicts of interest with NMFS inspections,
but that other officials thought that these concerns could be addressed
in an agreement between the two agencies.[Footnote 19] We recommended
that FDA and NMFS develop a memorandum of understanding (MOU) that, in
part, would use and leverage NMFS inspection services to more
efficiently and effectively monitor the safety of imported seafood. In
response, FDA stated that there were already three MOUs between FDA and
NMFS that dealt with seafood safety and inspection operations, but that
it would explore additional opportunities to better leverage NMFS
inspection resources and more efficiently and effectively protect the
public health. Among the three MOUs, the 1974 MOU between FDA and NMFS
stated, in part, that NMFS would provide FDA with information on
establishments under contract with it, and that such inspections and
consultations with FDA should diminish the need for FDA inspections.
Despite FDA's statements and the provisions in its 1974 MOU, FDA still
does not take into account whether NMFS has already inspected a
facility when FDA determines which facilities it will inspect. For
example, from 2005 through 2008, NMFS inspected one facility we visited
at least four times a year, yet FDA also inspected it in 2005, 2006,
and 2008. Furthermore, neither agency found any significant issues
during their inspections of this facility. Overall, in fiscal year
2007, FDA inspected 120 facilities that were also inspected by NMFS,
while FDA had not inspected 1,464 other facilities since before fiscal
year 2003. Also during fiscal year 2007, NMFS inspected 88 facilities
that FDA either had not inspected within the same fiscal year or had
not inspected at all. In its technical comments to our draft report,
FDA stated that it is currently negotiating an MOU with NMFS that is
intended to address its concerns about potential conflicts of interest.
Furthermore, CBP, NMFS, and FDA each have their own laboratory
capabilities for, among other things, determining the species of
seafood samples they receive. Moreover, because these agencies use
different testing methodologies and standards for species
identification, they do not acknowledge each others' laboratory
results, nor do they share the species standards they have developed.
CBP uses DNA sequencing to identify a seafood species, and FDA and NMFS
use the isoelectrophoresis method.[Footnote 20] While CBP has developed
some authenticated DNA samples of fish species, it uses GenBank DNA
sequences as a guide to conduct most of its laboratory testing for
species identification.[Footnote 21] FDA and NMFS do not believe that
the GenBank data are sufficiently accurate to use as the basis for a
regulatory action, such as providing validated evidentiary support to
prove species substitution during a criminal prosecution. As a result,
FDA is in the process of developing its own secure database of DNA
sequences for seafood species identification. FDA laboratory officials
told us the agency has developed DNA sequences for 72 seafood species
and is in the process of adding about 100 more species. NMFS has its
own library of standards for seafood species identification but has had
meetings with FDA regarding sharing species standards and getting DNA
analysis approved by an international accreditation agency as an
official method for species identification. According to FDA laboratory
officials, the agency would be willing to share its species standards
with CBP as well, but neither agency has had any discussions on this
matter. According to a senior CBP laboratory official, CBP has no need
to access any standards other than those contained in GenBank. Both CBP
and FDA could increase the number of DNA sequences they have available
to identify species substitution by combining and sharing their
standards. However, CBP, NMFS, and FDA have not collaborated with each
other to develop a comprehensive DNA database.
Conclusions:
Although FDA has tools that it could use to help detect and prevent
seafood fraud, the agency is not using them as efficiently and
effectively as it could. For example, the agency's primary regulatory
program for seafood firms--HACCP--does not require firms to identify
and establish controls to mitigate economic fraud risks, only potential
food safety hazards. Also, the agency does not provide the opportunity
for stakeholder comments prior to making changes to the Seafood List,
and it has not routinely updated the public version of the list
whenever FDA makes changes to it. This has limited the effectiveness of
the list in promoting uniformity in seafood species names and in
preventing species substitution. Likewise, not updating the Fish and
Fisheries Products Hazards and Controls Guidance to reflect the
labeling requirements of the Food Allergen Labeling and Consumer
Protection Act of 2004 has limited the usefulness of the guidance in
preventing species substitution.
Because responsibilities for detecting and preventing seafood fraud are
shared among three key federal agencies--CBP, NMFS, and FDA--effective
collaboration is important to operating efficiently and effectively and
to producing a greater public benefit than if the agencies acted alone.
Currently, however, the three agencies are mostly acting alone and have
not implemented key practices to begin collaborating more efficiently
and effectively, such as identifying a common goal and establishing
joint strategies to achieve the goal. As a result, the three agencies
are not sharing information that could be used to detect or prevent
seafood fraud and are working on creating individual databases of
seafood species standards and using different methods to do so. Until
these agencies begin collaborating more efficiently and effectively to
detect and prevent seafood fraud, duplication of efforts may continue
to occur, and the agencies may continue to miss opportunities to use
limited federal funds more efficiently and effectively.
Recommendations for Executive Action:
To help reduce the prevalence of seafood fraud and improve FDA's
actions to detect and prevent seafood fraud, we are recommending that
the Commissioner of the Food and Drug Administration take the following
three actions:
* propose amendments to FDA's seafood HACCP regulations to include
requirements that covered facilities include control points that can be
used to identify and mitigate economic fraud risks;
* provide the opportunity for stakeholder comments prior to formalizing
any changes to the Seafood List not required by law or regulation and
routinely update the public version of the list whenever FDA makes any
changes; and:
* update the Fish and Fisheries Products Hazards and Controls Guidance
to reflect the seafood labeling requirements of the Food Allergen
Labeling and Consumer Protection Act of 2004.
To maximize the efficiency and effectiveness of each agency's efforts
to detect and prevent seafood fraud and to increase interagency
collaboration, improve information sharing, and reduce overlaps, we
recommend that the Commissioner of Customs and Border Protection, the
Under Secretary of Commerce for Oceans and Atmosphere, and the
Commissioner of the Food and Drug Administration take the following two
actions:
* develop goals, strategies, and mechanisms to share information and
resources related to seafood fraud detection and prevention across
agency boundaries and:
* create a federal agencywide library of seafood species standards.
Agency Comments and Our Evaluation:
We provided the Departments of Commerce, Health and Human Services, and
Homeland Security with a draft of this report for their review and
comment. Commerce, representing NOAA, said that the draft report did a
fair and thorough job in assessing and isolating seafood fraud issues
and concerns shared by Commerce, HHS, and Homeland Security, and the
agency agreed with the two recommendations regarding interagency
collaboration that involved Commerce. Commerce also noted that while
the draft report emphasized the activities of the Seafood Inspection
Program, NOAA's Office for Law Enforcement also plays a pivotal role in
seafood fraud activities when detected. Commerce's specific comments
are presented in appendix II.
HHS, representing FDA, said that the draft report raised some important
issues regarding FDA's seafood program, and the agency generally agreed
with our recommendations. HHS provided additional information about
activities that FDA has under way related to specific recommendations.
Regarding our first recommendation, HHS said that FDA agrees that it is
appropriate to reassess whether to recommend that processors include
nonsafety hazards in their HACCP plans but did not say that the agency
would propose amending HACCP regulations to require such changes. We
continue to believe that the regulations should be amended. Regarding
our second recommendation, HHS said that FDA would reassess the
mechanism to seek stakeholder comments on changes to the Seafood List
but did not commit to providing stakeholders with the opportunity to
comment before changes are made to the list, as we recommended. We
continue to believe that it is important that stakeholders be able to
comment before changes are made to the list. While HHS said that FDA
had revised the Seafood List and would post it on its Web site soon,
HHS did not say whether FDA planned to routinely update the public
version of the list whenever it makes any changes, as we recommended.
We continue to believe that this is important. Regarding our fourth
recommendation, HHS said that FDA agrees that it should collaborate
with the other federal agencies to maximize efficient use of resources,
but HHS also said that FDA is currently involved in many collaborative
activities related to seafood fraud. We recognize that FDA has
collaborative activities under way; however, as this report indicates,
we believe that many opportunities exist to improve collaboration,
specifically in the detection and prevention of seafood fraud, by
following the key collaboration practices our report identifies. These
practices can increase the opportunities to identify and share the
relevant information and resources necessary for effective and
efficient prevention and detection of seafood fraud. HHS provided
technical comments that we incorporated into the report as appropriate.
HHS's specific comments are presented in appendix III.
Homeland Security, representing CBP, generally agreed with the two
recommendations that involved CBP. Regarding our recommendation to
create a federal agencywide library of seafood species standards, CBP
said that it believes that it would be more efficient for the agencies
to work with the National Institutes of Health in the maintenance of
GenBank and assist in addressing whatever shortcoming might be
associated with that data bank. We are not recommending whether CBP,
FDA, and NMFS should agree to use an existing data bank or to create a
new one. Rather, we are recommending that, to improve efficiency and
reduce costs, the three agencies collaborate to fully understand each
others needs, capabilities, and plans so they can agree on a single
species standards library. Homeland Security also provided technical
comments that we incorporated into the report as appropriate. Homeland
Security's specific comments are presented in appendix IV.
As agreed with your office, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 30 days
from the report date. At that time, we will send copies to the
appropriate congressional committees; the Secretaries of Commerce,
Health and Human Services, and Homeland Security; and other interested
parties. In addition, the report will be available at no charge on the
GAO Web site at [hyperlink, http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me at (202) 512-3841 or shamesl@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. Key contributors to this report are
listed in appendix V.
Sincerely yours,
Signed by:
Lisa Shames:
Director, Natural Resources and Environment:
[End of section]
Appendix I: Scope and Methodology:
The three federal agencies that play key roles in detecting and
preventing seafood fraud are (1) the Department of Homeland Security's
Customs and Border Protection (CBP), (2) the Department of Commerce's
National Marine Fisheries Service (NMFS), and (3) the Department of
Health and Human Services' Food and Drug Administration (FDA). We
reviewed data and documents from each agency on the amount and nature
of seafood fraud that they have identified and any corrective actions
they have taken against fraud perpetrators. We also reviewed program
guidance, inspection operation manuals, and other documentation and
interviewed knowledgeable officials to determine each agency's overall
approach and specific actions to detect and prevent seafood fraud--
including the priority given to seafood fraud detection and prevention
among their other responsibilities. We also observed FDA's and NMFS's
inspections of seafood processing facilities. In addition, we obtained
examples of criminal investigations of seafood fraud to understand the
nature and impact of seafood fraud.
For this report, we relied on the findings of our September 2008 report
to assess the reliability of FDA's data.[Footnote 22] The data we used
came from the same data sources used in our 2008 report, in which we
found the FDA data to be sufficiently reliable for the purposes of this
report. To assess the reliability of CBP and NMFS data, we performed
testing for obvious errors in accuracy and completeness and reviewed
relevant documentation. We also worked closely with agency officials to
identify and resolve any data problems. We determined that the data
from these three agencies were sufficiently reliable for the purposes
of this report.
Finally, we also met with representatives from six major seafood
industry associations to determine their views on the nature of the
seafood fraud problem, the actions they have taken to help prevent
seafood fraud, and how they interact with the key federal agencies. We
interviewed officials from the Catfish Farmers of America, Maine
Lobster Promotion Council, National Fisheries Institute, National
Restaurant Association, Southeastern Fisheries Association, and
Southern Shrimp Alliance.
We visited the Boston, New York/Newark, and Los Angeles/Long Beach
ports of entry. During these visits, we observed CBP's process for
reviewing import entry documents, discussed local targeting efforts and
whether any collaborative efforts related to seafood fraud existed
between CBP and FDA, and toured the port facilities. At the Los
Angeles/Long Beach ports, we also met with FDA officials to discuss and
observe their process for inspecting imported seafood.
We also interviewed officials from four states--California, Florida,
New York, and Texas--to determine their roles, responsibilities, and
interactions with the federal agencies in detecting and preventing
seafood fraud. We selected these states on the basis of their
population size and, because of their coastal location, their having a
potential port of entry for imported seafood. Additionally, we
interviewed officials at Alabama's Food and Drug Laboratory because of
its active efforts in developing laboratory methods for testing seafood
products.
To determine the extent that the key federal agencies collaborate with
each other to help detect and prevent seafood fraud, we first
identified practices that our previous work indicated can help enhance
and sustain collaboration among federal agencies.[Footnote 23] For the
purposes of this report, we focused on the first five of the eight
practices we previously identified for enhancing and maintaining
effective collaboration among federal agencies: (1) define and
articulate a common goal; (2) establish mutually reinforcing or joint
strategies to achieve that goal; (3) identify and address needs by
leveraging resources; (4) agree on roles and responsibilities; and (5)
establish compatible policies, procedures, and other means to operate
across agency boundaries. We did not address the following practices:
(1) develop mechanisms to monitor, evaluate, and report on results; (2)
reinforce agency accountability for collaborative efforts through
agency plans and reports; and (3) reinforce individual accountability
for collaborative efforts through performance management systems. We
did not address these practices because we found that CBP, NMFS, and
FDA had not implemented the first five practices. As a result, because
limited collaborative activities were under way, we did not expect the
agencies to have developed mechanisms to monitor and report on the
results of their collaboration, reinforce accountability by preparing
reports, or establish performance management systems. We also analyzed
agency documents and interviewed officials from CBP, NMFS, and FDA to
determine the extent to which they had (1) implemented the first five
previously mentioned collaboration practices, (2) identified and shared
information that could be beneficial in addressing seafood fraud, and
(3) engaged in overlapping seafood fraud-related activities.
We conducted this performance audit from January 2008 to February 2009,
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives.
[End of section]
Appendix II: Comments from the Department of Commerce:
United States Department Of Commerce:
The Deputy Under Secretary for Oceans and Atmosphere:
Washington, D.C. 20230:
January 27, 2009:
Ms. Lisa Shames:
Director, Natural Resources and Environment:
U.S. Government Accountability Office:
441 G Street, NW:
Washington, D.C. 20548:
Dear Ms. Shames:
Thank you for the opportunity to review and comment on the Government
Accountability Office's draft report entitled, Seafood Fraud: FDA
Program Changes and Better Collaboration among Key Federal Agencies
Could Improve Detection and Prevention (GAO-09-78). On behalf of the
Department of Commerce, I enclose the National Oceanic and Atmospheric
Administration's programmatic comments to the draft report.
Sincerely,
Signed by:
Mary M. Glackin:
Deputy Under Secretary for Oceans and Atmosphere:
Enclosure:
Department of Commerce:
National Oceanic and Atmospheric Administration:
Comments on the Draft GAO Report Entitled "FDA Program Changes and
Better Collaboration among Key Federal Agencies Could Improve Detection
and Prevention" (GAO-09-258/January 2009):
General Comments:
In general, the report on seafood fraud detection does a fair and
thorough job in assessing and isolating the issues and concerns shared
by the named agencies, including the National Oceanic and Atmospheric
Administration (NOAA). The report will be used to assist NOAA to
determine more effective methods in seafood fraud detection and assist
in prioritizing the concerns for correction and implementation. The
report and the recommended NOAA solutions will be shared with the
proper industry groups to facilitate changes in seafood fraud and its
detection.
It should be noted that, while throughout the draft report much
emphasis was placed on the NOAA activities relative to the Seafood
Inspection Program, NOAA's Office of Law Enforcement also plays a
pivotal role in seafood fraud activities when detected.
NOAA Response to GAO Recommendations:
"To maximize the efficiency and effectiveness of each agency's efforts
to detect and prevent seafood fraud and to increase interagency
collaboration, improve information sharing, and reduce overlaps, we
recommend that the Commissioner of Customs and Border Protection, the
Under Secretary of Commerce for Oceans and Atmosphere, and Commissioner
of the Food and Drug Administration take the following two actions."
Recommendation 1: "develop goals, strategies, and mechanisms to share
information and resources related to seafood fraud detection and
prevention across agency boundaries."
NOAA Response: NOAA agrees with this recommendation. Such strategies
and mechanisms have already been initiated in relation to other areas
of seafood inspection and production. The NOAA Seafood Inspection
Program, aligned with other NOAA agencies has recently adopted the
strategy to research and implement proactive testing and evaluation
methods to detect and isolate economic fraud practices to protect the
consumer and assist industry in enhanced processing methods. NOAA will
certainly work with the Department of Homeland Security's Customs and
Border Protection and the Department of Health and Human Services' Food
and Drug Administration to further this goal and to reduce seafood
fraud in the United States.
Recommendation 2: "create a federal agency-wide library of seafood
species standards."
NOAA Response: NOAA agrees with this recommendation. Such a library of
documented seafood species standards shared among federal agencies
would lead to increased program efficiencies and effectiveness by
reducing duplication and creating a more comprehensive collection of
species standards. The National Seafood Inspection Laboratory is
currently holding discussions with the other agencies on this subject
and NOAA's National Marine Fisheries Service will continue to implement
this recommendation using existing resources.
[End of section]
Appendix III: Comments from the Department of Health and Human
Services:
Department Of Health & Human Services:
Office Of The Secretary:
Assistant Secretary for Legislation:
Washington, DC 20201:
January 30, 2009:
Lisa Shames, Director:
Natural Resources and Environment:
U.S. Government Accountability Office:
441 G Street N.W.
Washington, DC 20548:
Dear Ms. Shames:
Enclosed are comments on the U.S. Government Accountability Office's
(GAO) report entitled: "Seafood Fraud: FDA Program Changes and Better
Collaboration Among Key Federal Agencies Could Improve Detection and
Prevention (GAO-09-258).
The Department appreciates the opportunity to review this report before
its publication. Sincerely,
Signed by:
Barbara Pisaro Clark:
Acting Assistant Secretary for Legislation:
Attachment:
FDA's General Comments to the U.S. Government Accountability Office's
(GAO) Draft Report Entitled, Seafood Fraud - FDA Program Changes and
Better Collaboration Among Key Federal Agencies Could Improve Detection
and Prevention (GAO-09-258):
The Food and Drug Administration (FDA) appreciates the opportunity to
review and comment on the Government Accountability Office's (GAO)
draft report. GAO has raised some important issues regarding FDA's
seafood program. FDA strives continually to advance its public health
mission, and this includes efforts to improve the safety, sanitation,
suitability, and proper labeling of seafood.
FDA's Specific Comments on GAO Recommendations:
GAO Recommendation 1:
To help reduce the prevalence of seafood fraud and improve FDA's
actions to detect and prevent seafood fraud, we are recommending that
the Commissioner of the Food and Drug Administration propose amendments
to FDA's seafood HACCP regulations to include requirements that covered
facilities include control points that can be used to identify and
mitigate economic fraud risks.
FDA Response:
FDA agrees with GAO that it is appropriate at this time to reassess
whether to recommend that processors include nonsafety hazards. When
FDA proposed the Seafood HACCP Regulation, 21 CFR 122, in 1994, FDA
included a recommendation, not a requirement, that HACCP plans include
controls for hazards unrelated to safety, such as economic fraud.
Approximately 75 comments addressed this provision, the vast majority
of which urged that it be eliminated from the regulations. Those that
argued for removal stated that 1) HACCP for safety purposes would be a
big challenge for both the industry and regulators, and that inclusion
of nonsafety hazards might be overwhelming; 2) nonsafety hazards are
covered adequately by existing FDA regulations and by industry quality
control programs; 3) inclusion of nonsafety hazards deviates from
internationally recognized HACCP principles; and, 4) inclusion of
nonsafety hazards would dilute and jeopardize a desirable industry
focus on safety. Those that argued for inclusion of economic
adulteration stated that 1) the same conditions of processing that
affect the occurrence of safety hazards affect the occurrence of
nonsafety hazards, making the two control systems compatible; 2) an
improvement in consumer confidence in seafood cannot be achieved
without improvements relative to economic deception; 3) the seafood
industry considers economic fraud to be the most significant hazard
affecting the marketing of its products; 4) species substitution can be
safety related; 5) HACCP controls would likely enhance compliance with
existing nonsafety standards; and, 6) inclusion of controls for
economic fraud would not significantly increase the costs to industry.
After review of the comments, FDA concluded that the HACCP system would
have to mature and FDA would need to learn more before it could
determine whether a mandatory HACCP program should include nonsafety
matters. Additionally, the agency noted that the statutory provisions
that form the basis for the Seafood HACCP regulations are safety
provisions.
FDA's application of HACCP is intended for the effective enforcement of
sections 402(a)(1) and (a)(4) of the Federal Food, Drug, and Cosmetic
Act, which apply to products that contain substances that may render
the product injurious to health and to processing conditions that are
insanitary and that could render a product injurious to health. Thus,
the only issue for FDA to consider in the preparation of the final
regulations was whether to retain the recommendation, not requirement,
to include nonsafety hazards in processors' HACCP programs. FDA was
persuaded by the point raised by some comments that advisory provisions
of regulations are often confused with or misapplied as requirements.
For these reasons, the recommendation to include economic fraud in
HACCP plans was not included in the final regulation.
After more than a decade of implementation, FDA recognizes the Seafood
HACCP program as a mature program, and agrees with GAO that this is an
appropriate time to reassess whether to recommend that processors
include nonsafety hazards, such as economic fraud, in their HACCP
plans.
GAO Recommendation 2:
To help reduce the prevalence of seafood fraud and improve FDA's
actions to detect and prevent seafood fraud, we are recommending that
the Commissioner of the Food and Drug Administration publicize the
criteria FDA uses to revise the Seafood List, provide the opportunity
for stakeholder comments prior to formalizing any changes to the list
not required by law or regulation, and routinely update the public
version of the list whenever FDA makes any changes.
FDA response:
FDA agrees with GAO that it should reassess the mechanism to seek
stakeholder comments on potential changes in the list of acceptable
market names and inform stakeholders of the changes.
The last hard copy version of The Seafood List was published in 1993.
Since then FDA has made the decision to produce the document only in an
electronic version, available on the Agency website. The first and most
recent electronic-only version of the document was published in 2002.
Between the 1993 and 2002 version, there were market name changes
associated with 22 species of fish, all mandated by law or regulation
(e.g., catfish and brown king crab). Changes mandated by regulation
undergo a public notice and comment period. Since 2002, FDA has
accepted new market names for an additional 23 species of fish, none of
them mandated by law or regulation.
FDA has recently completed work on the next version of the document and
expects that it will be posted on the Agency's website very shortly.
This version will include the 23 most recent market name changes (e.g.,
langostino lobster). It will also include approximately 400 changes in
scientific names and additional species names in order to stay current
with taxonomic convention. These latter changes do not affect
industry's understanding of suitable market names. In addition, the
guidance will include a description of the factors that FDA uses in
determining acceptable market names.
GAO Recommendation 3:
To help reduce the prevalence of seafood fraud and improve FDA's
actions to detect and prevent seafood fraud, we are recommending that
the Commissioner of the Food and Drug Administration update the Fish
and Fisheries Products Hazards and Controls Guidance to reflect the
seafood labeling requirements of the Food Allergen Labeling and
Consumer Protection Act.
FDA Response:
The Fish and Fishery Products Hazards and Controls Guidance is a set of
recommendations from FDA to the fish and fishery products processing
industry regarding the hazards that are reasonably likely to occur in
such products and providing suitable controls to minimize the risk of
occurrence of those hazards. FDA intends to reflect the labeling
requirements of the Food Allergen Labeling and Consumer Protection Act
in the fourth edition of Fish and Fishery Products Hazards and Controls
Guidance. The document is currently in Agency clearance.
GAO Recommendation 4:
To maximize the efficiency and effectiveness of each agency's efforts
to detect and prevent seafood fraud and to increase interagency
collaboration, improve information sharing, and reduce overlaps, we
recommend that the Commissioner of Customs and Border Protection, the
Under Secretary of Commerce for Oceans and Atmosphere, and Commissioner
of the Food and Drug Administration develop goals, strategies, and
mechanisms to share information and resources related to seafood fraud
detection and prevention across agency boundaries.
FDA Response:
Three key federal agencies share responsibilities for detecting and
preventing seafood fraud. According to GAO's report, each Agency mostly
acts alone and has not implemented key practices to begin collaborating
more effectively. FDA agrees that it should collaborate with the other
federal agencies to maximize efficient use of resources and is
currently collaborating with National Marine Fisheries Service (NMFS)
to develop an inter-agency library of seafood species standards. As
mentioned by GAO, FDA also has collaborated, leveraged resources, and
shared data with the Department of Homeland Security's Customs and
Border Protection (CBP) in efforts such as Operation Guardian and in
sharing weekly refusal reports.
In December of 2007, Department of Homeland Security, Immigration, and
Customs Enforcement (ICE) implemented Operation Guardian to combat the
growth in the importation and distribution of a variety of consumer
products, which potentially threaten the health and safety of U.S.
consumers. Since the inception of Operation Guardian, several joint
enforcement efforts have been initiated against imported food,
including seafood, involving ICE, CBP, and FDA. In May 2007, Guardian
regional working groups composed of ICE, CBP, and FDA personnel were
formed throughout the country. Sixty-one agents from FDA's Office of
Criminal Investigations (OCI) are assigned to the ICE-chaired 35
regional working groups.
Guardian headquarters representatives and regional working group
members generally meet monthly to evaluate ongoing investigations and
incoming fraud allegations, and to initiate new enforcement actions.
Several of these investigations are targeted at individuals and
entities responsible for the fraudulent importation, through
transshipment, of seafood subject to CBP anti-dumping duties and FDA
import alerts which are intended to prevent seafood containing
unapproved antibiotics from entering the United States. ICE and OCI
will continue cooperative investigative efforts into such areas as
transshipment or adulteration of seafood products. In addition,
collaboration between CBP and the FDA has resulted in regulatory
actions and import alerts.
Some other specific examples of FDA's collaborative efforts include the
following:
* FDA collected a sample of "langostino" meats through the Port of
Blaine, Washington that FDA determined were freshwater crawfish instead
of langostinos. Freshwater crawfish from China are subject to an anti-
dumping duty of 223 percent. An initial review of entries indicated
that there were at least 23 entries of "langostino" meat valued at $2.3
million. FDA's report of these findings to members of the ICE resulted
in the collection of $2.9 million in tariff duties from a Canadian firm
that exports seafood to the United States. The firm admitted that it
had misclassified tariff duties on freshwater crawfish from China.
* FDA participated in a joint investigation with United States Fish
&Wildlife Service (USFWS) and ICE that involved the smuggling of
illegal caviar and the sale of adulterated and misbranded product
throughout the United States. Marky's Caviar, also doing business as
Optimus, Inc., purchased sturgeon caviar smuggled into the United
States by couriers inside suitcases without a CBP declaration or USFWS
inspection. The investigation determined that the sturgeon caviar and
other fish roe sold were adulterated and misbranded. The caviar was
adulterated by mixing Beluga caviar with less valuable caviar. The
caviar was misbranded because it was labeled as Russian caviar when it
was in fact Chinese. On April 15, 2005, the firm was sentenced to pay a
$1 million criminal fine into the Lacey Act Reward Fund, to adhere to a
stringent wildlife compliance plan, and 5 years probation. The sentence
was imposed for knowingly purchasing sturgeon caviar with false
wildlife invoices, knowingly purchasing smuggled caviar, and failing to
exercise due care in purchasing smuggled caviar.
GAO Recommendation 5:
To maximize the efficiency and effectiveness of each agency's efforts
to detect and prevent seafood fraud and to increase interagency
collaboration, improve information sharing, and reduce overlaps, we
recommend that the Commissioner of Customs and Border Protection, the
Under Secretary of Commerce for Oceans and Atmosphere, and Commissioner
of the Food and Drug Administration create a federal agency-wide
library of seafood species standards.
FDA Response:
FDA is collaborating with other Federal agencies in developing a
library of seafood species standards. FDA held a two-day workshop in
January 2008 entitled Regulatory Applications of DNA-Barcoding for the
Species Identification of Fish which was attended by members of the
NMFS National Seafood Inspection Laboratory, the NMFS Northwest
Fisheries Science Center, the Smithsonian National Museum of Natural
History, the Canadian Center for DNA Barcoding, and the International
Consortium for the Barcode of Life. In collaboration with the
Smithsonian NMNH and the Canadian Center for DNA Barcoding, FDA
published a paper in 2008 entitled Potential Use of DNA Barcodes in
Regulatory Science: Applications of the Regulatory Fish Encyclopedia in
the Journal of Food Protection. This paper laid the groundwork for DNA
barcoding at FDA and provided a bridge for the new methodology with
FDA's established set of reference tissues used in the old protein
isoelectric focusing method. FDA also published an FDA Laboratory
Information Bulletin method in 2008 entitled, A Protocol for Validation
of DNA-Barcoding for the Species Identification of Fish for FDA
Regulatory Compliance, which is currently in the final stages of a
three laboratory inter-lab trial. This trial is the first step
necessary for performing a full collaborative study required for
international accreditation.
FDA has also established a contract with the Smithsonian National
Museum of Natural History for authentication and vouchering of seafood
standards collected by FDA. FDA believes that this contract could
potentially be the foundation for the GAO-recommended library of
seafood species standards, and will be discussing that possibility with
NMFS and CBP.
[End of section]
Appendix IV: Comments from the Department of Homeland Security:
U.S. Department of Homeland Security:
Washington, DC 20528:
January 30, 2009:
Ms. Lisa Shames:
Director, Natural Resources and Environment:
Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Ms. Shames:
The Department of Homeland Security (DHS) appreciates the opportunity
to review and provide comment on the Government Accountability Office's
(GAO) draft report titled, SEAFOOD FRAUD: FDA Program Changes and
Better Collaboration among Key Federal Agencies Could Improve Detection
and Prevention (GAO-09-258).
DHS generally concurs with the report's two recommendations. Following
are our recommendation-specific comments; technical comments were
provided under separate cover.
Recommendation 1: Develop goals, strategies, and mechanisms to share
information and resources related to seafood fraud detection and
prevention across agency boundaries.
Response: Concur. Customs and Border Protection (CBP) will consider
issues related to seafood fraud in its regular assessment of trade risk
and its annual planning process in a continuing an ongoing effort to
address these matters.
CBP was an active member of the President's interagency work group
addressing import safety concerns. The interagency work group developed
the Import Safety Action Plan, which acknowledges multiple areas of
import safety concerns including information sharing among agencies.
The action plan recognizes that agency collaboration, including the
International Trade Data System (ITDS), is essential for addressing
import safety concerns effectively. ITDS is a single window information
integration program that will allow agencies to collaborate in the
identification and prioritization of high-risk shipments, including
those considered import safety risks and anti-dumping risks, such as
those identified in this report.
On the heels of the President's Action Plan for Import Safety, the
implementation of interagency workgroups led DHS agencies to conduct
special operations and other efforts targeted at addressing health and
safety issues. Throughout the report, GAO makes note of these special
operations, specifically Operation Guardian, where interagency
collaboration is demonstrated.
Recommendation 2: Create a federal agency-wide library of seafood
species standards.
Response: Concur. CBP would not oppose the development of a national
agency database provided that CBP be issued the funding and the
authority to maintain the database.
CBP currently uses "Gen-Bank" which is a DNA Sequence Library of
different species that is maintained by the National Institutes of
Health/National Center for Biotechnical Information. This database
accepts DNA Sequence Data from around the world and is truly
international in nature and wide ranging. Prior to the entry of
information into the database the information is reviewed by a panel of
NIH DNA specialists. Being international in nature, it is more widely
accepted around the world for a number of purposes. CBP frequently uses
Gen-Bank and has not identified problems or issues with the data to
date.
The proposal to create an agency wide database would appear to be
duplicative of the Gen-Bank but only on a smaller National level. CBP
would not oppose the development of a national agency database provided
that CBP be issued the funding and the authority to maintain the
database. However, CBP believes that it would be more efficient for the
agencies to work with NIH in the maintenance of Gen-Bank and assist in
whatever shortcoming might be associated with that data bank.
Again, we thank you for the opportunity to review and provide comments
on this draft report and look forward to working with you on future
homeland security issues.
Sincerely,
Signed by:
Jerald E. Levine Director:
Departmental GAO/OIG Liaison Office:
[End of section]
Appendix V: GAO Contact and Staff Acknowledgments:
GAO Contact:
Lisa Shames, (202) 512-3841 or shamesl@gao.gov:
Staff Acknowledgments:
In addition to the individual named above, Stephen D. Secrist,
Assistant Director; Ami Ballenger; Carolyn M. Boyce; Carol Bray; Kevin
S. Bray; Nancy Crothers; Winchee Lin; David Moreno; and Matt Sumpter
made significant contributions to this report.
[End of section]
Footnotes:
[1] GAO, Results Oriented Government: Practices That Can Help Enhance
and Sustain Collaboration among Federal Agencies, [hyperlink,
http://www.gao.gov/products/GAO-06-15] (Washington, D.C.: Oct. 21,
2005). The other three practices discussed in our report on effective
collaboration are (1) develop mechanisms to monitor, evaluate, and
report on results; (2) reinforce agency accountability for
collaborative efforts through agency plans and reports; and (3)
reinforce individual accountability for collaborative efforts through
performance management systems.
[2] See our most recent series, GAO, High-Risk Series: An Update,
[hyperlink, http://www.gao.gov/products/GAO-09-271] (Washington, D.C.:
January 2009). Also see, GAO, High-Risk Series: An Update, [hyperlink,
http://www.gao.gov/products/GAO-07-310] (Washington, D.C.: January
2007).
[3] ICE is the largest investigative branch of the Department of
Homeland Security. According to ICE, the agency assigns special agents
to, among other things, investigate manufacturers and importers
allegedly involved in the duty evasion schemes and uses agents
stationed in foreign countries to conduct investigations.
[4] Import alerts are designed to ensure that products from processors
covered by the alert are detained and refused entry into the United
States until the importer can prove that the imported product is safe
and complies with all applicable regulations, generally by providing
FDA with the results of third-party laboratory analysis of the product.
[5] Generally, the Congress establishes normal customs duties and
authorizes the executive branch to impose special customs duties, such
as antidumping and countervailing duties.
[6] The 2008 Farm Bill made catfish subject to mandatory inspection by
USDA. The new law requires that USDA continuously inspect domestic
catfish, and that imported catfish meet equivalent standards before
being imported into the United States. The Secretary of Agriculture in
consultation with the Commissioner of the Food and Drug Administration
has until the end of 2009 to issue regulations to implement the new
law.
[7] NFI is a seafood industry advocacy organization. According to NFI,
its mission is to educate the American public about seafood safety,
sustainability, and nutrition. NFI's nearly 400 members range from the
owners of small, family-owned fishing vessels to large, nationally
traded corporations and include representatives of business, education,
and government.
[8] The third-party audit of the member's processes is the normal
practice NFI uses to hold its member accountable, but it reserves the
right to dismiss the member from the Better Seafood Bureau without a
third-party inspection or to take a different action, depending upon
the type of violation.
[9] [hyperlink, http://www.gao.gov/products/GAO-06-15].
[10] All imported goods are reviewed for national security purposes in
a screening process that occurs prior to the importer filing for entry
of the imported goods.
[11] The Department of Commerce's definition of true, dusted shrimp is
that having a coating of rice or wheat flour constituting between 4 and
10 percent of the product's total weight after being dusted, but prior
to the shrimp being frozen. In conjunction with subject matter experts,
CBP developed a set of characteristics that a product is required to
meet to be considered true, dusted shrimp.
[12] Proposal to Establish Procedures for the Safe Processing and
Importing of Fish and Fishery Products, 59 Fed. Reg. 4142 (Jan. 28,
1994).
[13] GAO, Food Labeling: FDA Needs to Better Leverage Resources,
Improve Oversight, and Effectively Use Available Data to Help Consumers
Select Healthy Foods, [hyperlink,
http://www.gao.gov/products/GAO-08-597] (Washington, D.C.: Sept. 9,
2008).
[14] [hyperlink, http://www.gao.gov/products/GAO-08-597].
[15] The Maine Lobster Promotion Council, established by Maine in 1991,
markets and promotes the sale of Maine lobster in local, regional,
national, and world markets year-round. The council comprises
harvesters, dealers, and public members from each of Maine's three
regions.
[16] U.S. Food and Drug Administration, Center for Food Safety and
Applied Nutrition, Fish and Fisheries Products Hazards and Controls
Guidance: Third Edition (June 2001). See the following Web address:
[hyperlink, http://www.cfsan.fda.gov/~comm/haccp4.html].
[17] [hyperlink, http://www.gao.gov/products/GAO-06-15].
[18] NMFS inspected 63 foreign facilities from 2007 through November
2008, and FDA inspected 112 foreign facilities from October 2006
through June 2008.
[19] GAO, Food Safety: FDA's Imported Seafood Safety Program Shows Some
Progress, but Further Improvements Are Needed, [hyperlink,
http://www.gao.gov/products/GAO-04-246] (Washington, D.C.: Jan. 30,
2004).
[20] Isoelectrophoresis is a method of testing that uses an electric
field to separate proteins for a species to create a distinct pattern
that can be used to compare with and identify a seafood species, among
other types of species. This method of testing has been authenticated
as an official method for species identification by an international
accreditation agency.
[21] GenBank is an open-access DNA sequence database that is maintained
at the National Institutes of Health's National Center for
Biotechnology Information. GenBank receives DNA sequences from
laboratories throughout the world. After being reviewed by National
Center staff, these DNA sequences are placed in the public database.
[22] GAO, Food Labeling: FDA Needs to Better Leverage Resources,
Improve Oversight, and Effectively Use Available Data to Help Consumers
Select Healthy Foods, [hyperlink,
http://www.gao.gov/products/GAO-08-597] (Washington, D.C.: Sept. 9,
2008).
[23] GAO, Results Oriented Government: Practices That Can Help Enhance
and Sustain Collaboration among Federal Agencies, [hyperlink,
http://www.gao.gov/products/GAO-06-15] (Washington, D.C.: Oct. 21,
2005).
[End of section]
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